Allstate Ins. Co. v. Dailey

• Decision Date: 28 April 1975
• Citation: 367 N.Y.S.2d 87,47 A.D.2d 375
• Parties: ALLSTATE INSURANCE COMPANY, Respondent, v. Frank DAILEY, Respondent, and Travelers Indemnity Company, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 87

367 N.Y.S.2d 87

47 A.D.2d 375

ALLSTATE INSURANCE COMPANY, Respondent, v. Frank DAILEY, Respondent, and Travelers Indemnity Company, Appellant.

Supreme Court, Appellate Division, Second Department.

April 28, 1975.

Samuel F. Simone, Yonkers (Richard Bakalor, New York City, of counsel), for appellant.

King, Edwards & O'Connor, White Plains (Rocco Conte, White Plains, of counsel), for respondent Allstate Ins. Co.

Longhi & Loscalzo, P.C., New York City (Anthony J. Loscalzo, New York City, of counsel), for respondent Dailey.

Before GULOTTA, P.J., and HOPKINS, MARTUSCELLO and LATHAM, JJ.

HOPKINS, Justice.

Frank Dailey, while operating his wife's automobile, was injured as the result of a collision between that vehicle and a vehicle operated by Duncan Patterson and owned by National Car Rental System, Inc. The Dailey automobile was insured by Allstate Insurance Company. National's automobile was insured by The Travelers Indemnity Company. ¹

National rented its automobile to Patterson, who used a credit card issued in the name of George Powers and a forged or stolen identification card and license. After the collision National contested its liability as owner on the ground that its automobile had not been driven with its consent or permission at the time of the accident. Dailey then instituted an arbitration proceeding under the uninsured motorists' provision of Allstate's policy. Allstate moved to stay arbitration, contending that the policy's provision was inapplicable, since there existed insurance on National's automobile. Travelers was joined as a party to the proceedings.

The Special Term held that arbitration should be permanently stayed on the ground that National's automobile was being operated by Patterson with consent under the circumstances recited. We affirm. Although Patterson obtained the lease of the automobile from National through fraudulent means, National cannot free itself from its liability as owner under the statutes of New York (Vehicle and Traffic Law, § 388).

The statutes of New York imposing a showing of financial responsibility as a condition to the registration and operation of motor vehicles express a strong public policy that a person injured by the negligence of a driver should have recourse to a defendant able to respond in damages (Motor Vehicle Acc. Ind. Corp. v. Continental Nat. Amer. Group Co., 35 N.Y.2d 260, 264, 360 N.Y.S.2d 859, 862, 319 N.E.2d 182, 184; cf. Cooperman v. Ferrentino, 37 A.D.2d 474, 478, 326 N.Y.S.2d 675, 680). Thus, renters of automobiles may not enforce restrictions on the use of the automobiles by the lessee and thereby escape liability to a third person on the ground that the violation of the restriction removed the element of consent which the statute (Vehicle and Traffic Law, § 388) requires (Motor Vehicle Acc. Ind. Corp. v. Continental Nat. Amer. Group Co., Supra, 35 N.Y.2d p. 265, 360 N.Y.S.2d p. 863, 319 N.E.2d p. 185).

Travelers (representing National) argues, however, that neither New York's public policy nor the rule in the Continental case touches this case. It urges that National would not be liable if Patterson had stolen the automobile (Lotito v. Kyriacus, 272 App.Div. 635, 74 N.Y.S.2d 599; General Acc. Group v. Noonan, 66 Misc.2d 528, 321 N.Y.S.2d 483) and that Allstate is obligated to furnish coverage in the event the operator of an automobile insured by it is involved in an accident with a stolen vehicle (Insurance Law, § 167, subd. 2--a). The fraud of Patterson in obtaining the automobile from National, the argument continues, is equivalent to a theft in that, in truth, there can be no consent by the owner to operate his automobile if the operator's fraud induces the consent (cf. Weatherford v. Aetna Ins. Co., 385 S.W.2d 381 (Tex.); Roehrich v. Holt Motor Co., 201 Minn. 586, 277 N.W. 274).

Travelers' argument has surface conceptual plausibility. As between the parties to the lease, it may be assumed that National was duped by Patterson, and that it would not have rented its vehicle to him if it had known that he was using another's credit card and a forged license. National dealt with Patterson as if he were Powers, the owner of the credit card. At common law fine distinctions, almost metaphysical in their properties, were drawn between larceny and embezzlement, and between custody, title and possession, ² so much so that responsibilities of persons under these concepts were confused and ambiguous (cf. Commonwealth v. Rubin, 165 Mass. 453, 43 N.E. 200 (HOLMES, J.); Commonwealth v. Ryan, 155 Mass. 523, 30 N.E. 364 (HOLMES, J.); Justices v. People ex rel. Henderson, 90 N.Y. 12; People v. Van Dusen, 165 N.Y. 33, 58 N.E. 755; People v. Stiller, 255 App.Div. 480, 7 N.Y.S.2d 865, affd. 280 N.Y. 519, 19 N.E.2d 923). We prefer not to indulge in analysis of such purely conceptual implications, but to follow what we consider to be the broad intent of our public policy and...